How Is Foreign Currency Exchanged?

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How Is Foreign Currency Exchanged?

Foreign currency is exchanged in one of two ways. Find out about how foreign currency is exchanged with help from a senior financial analyst in this free video clip.

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Hi, I'm Jackie Jackson, and I'm going to talk to you about how foreign currency is exchanged. Now there is two different ways that foreign currency is exchanged. If you are going to be going on a trip to Paris and you are trying to figure out how to exchange your currency for euros, well what you do is you take your American dollars to the bank or you can go to the airport, they have desks there where you can do it and you give them your American dollars and they are going to give you back euros for you to spend in France. The other way that foreign currency exchange takes place is on a much broader scale when people trade currency either to make a profit because they think it's more valuable to have their money in say euros than in American dollars or if they need to make a purchase in France in which case they need to purchase euros in order to say buy a factory in France. That type of trading which happens on a much broader scale, happens at investment banks where there are specific brokers that are trained to monitor the fluctuation and the forex, or the foreign exchange market, and can help to get a company or corporation the best rate possible on the large volume of currency that they are looking to exchange.